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NEW AOL TIME WARNER CEO: PREDICTIONS 'TOO EXUBERANT'

'Online Is Still Dragging,' Parsons Tells New Orleans Conference

NEW ORLEANS (AdAge.com) -- AOL Time Warner's CEO-to-be, Richard Parsons, suggested today that the company may have overhyped its prospects after America Online and Time Warner merged, creating the current frustration on Wall Street and a battered stock price.

Among the concerns is the less-than-expected synergy on the ad-sales front among the media company's divisions and also the flagging fortunes of what is now its America Online unit.

'Too exuberant'
"We're probably getting justifiably punished for being a little too exuberant," Mr.Parsons, who assumes his new post this month, said at the National Cable & Telecommunications Association conference.

AOL Time Warner's stock was trading today at around $18 a share, down from the $58 52-week high.

But Mr. Parsons said the company has no plans to spin off the America Online division to placate Wall Street, as has been speculated.

"There is no analytical reason that disaggregating the company is going to

increase its value," he said. "What we've got to do is answer some serious questions around AOL."

He said those questions include the future of advertising as a revenue source on AOL and how the service, used mostly by non-broadband users, will move forward as broadband rolls out at increasing levels. The company's designated chief operating officer, Robert Pittman, a former AOL executive, is on a mission to rescue the division.

'People ... are confused'
"All of the [company's] businesses are roaring with one exception," Mr. Parsons said. "No question the implosion of the dot-com bubble has affected people's expectations. ... People at this point are confused what the future prospects are, but we still have faith."

Emphasizing that point, Mr. Parsons said AOL Time Warner has seen or will see a modest resuscitation in the ad market -- except at America Online.

"In the television space, the spot market has turned up," he said. "Magazine advertising is looking like the second half of the year could be better. Online is still dragging."

Comcast, Insight Communications
Mr. Parsons was on a panel at the conference that included two cable executives, Brian Roberts, president of Comcast Corp., and Michael Willner, president-CEO of Insight Communications.

Mr. Roberts expressed exasperation with the "awfully long, frustrating period" Comcast is going through as it waits for the government to clear its proposed merger with AT&T Broadband.

The other major merger that could shake up the cable industry is the proposed joining of satellite providers DirecTV and EchoStar. Mr. Willner said satellite providers have an advantage over cable in that they can market themselves nationally and a merged company would only heighten that.

"They have certain advantages over cable, in marketing, in their ability to have a national look and brand," he said.